Appendix 70 complicated, but it gives a much more accurate estimate than any previous efforts. 9 It is important to point out that, although we correctly identify many MIT alumni-founded companies in various discussions throughout this <strong>report</strong> (e.g., Tables 10 and 11), in the underlying database that gets scaled we only use those firms formed by alumni who completed survey <strong>report</strong>s in 2003. Thus, some very significant MIT alumni firms were NOT included in the database, such as Arthur D. Little, AMP, Campbell Soup, Genentech, Hewlett- Packard, Intel, McDonnell Douglas, Raytheon, Rockwell, and Texas Instruments, because the MIT founder had died in all these cases. These omissions illustrate the importance of the scale factor we employed to produce a more accurate estimate that partially compensates for the many firms explicitly o<strong>mit</strong>ted. This scaling method rests on three assumptions. One is that the proportion of entrepreneurs among the respondents is the same as the proportion of entrepreneurs among the non-respondents. The second is that the respondent entrepreneurs are equally as successful as the non-respondent entrepreneurs. The proportion of entrepreneurs among the non-respondents (or their success level) could just as easily be higher as it could be lower than the proportion among the respondents. The third is that, for entrepreneurs who started more than one company, then on average the performance of their former or subsequent firms is similar to the firm we observe. Let’s consider how wrong we might be in these estimates. The effect of cutting our scale factor by two (which would represent the extreme case where twice as many respondents as non-respondents were entrepreneurs, or where respondent entrepreneurs were twice as successful as non-respondents), generates the results that are in the conservative wording we chose to use in the introduction of this <strong>report</strong>: …if the active companies founded by MIT graduates formed an independent nation, conservative estimates indicate that their revenues would make that nation at least the seventeenth-largest economy in the world. Under these circumstances, we would be estimating that 12,900 companies created by MIT alumni employ 1.6 million people and have annual world sales of $1 trillion. That is roughly equal to a gross domestic product of $500 billion, a little less than the GDP of the Netherlands and more than the GDP of Turkey (2006 International Monetary Fund, nominal GDP—not purchasing power parity or PPP). 9. Similar extrapolation methods were used in a recent study of immigrant entrepreneurs’ role, using a scale factor to extrapolate from 2,054 responses in their survey database to the estimated economic <strong>impact</strong> drawn from 28,776 companies, a scale-up factor of ~14.010 (Wadhwa et al., 2007). ENTREPRENEURIAL IMPACT: THE ROLE OF MIT
Notes ENTREPRENEURIAL IMPACT: THE ROLE OF MIT 71
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Entrepreneurial Impact: The Role of
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Entrepreneurial Impact: The Role of
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Table of Contents An Evolving MIT I
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closed prior to our 2003 survey. Th
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The MIT Technology Licensing Office
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The Role of MIT Alumni Companies in
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The Role of MIT Alumni Companies in
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